Saturday, October 25, 2008
Cerberus Isn't Seeking GM Management Changes in Chrysler Merger
By Mike Ramsey
Oct. 25 (Bloomberg) -- Chrysler LLC owner Cerberus Capital Management LP isn't seeking to remove General Motors Corp. leaders including Chief Executive Officer Rick Wagoner in a merger of the automakers, a person familiar with the talks said.
Cerberus also wants a ``meaningful'' stake, not a majority, in a combined company, said the person, who asked not to be identified because the negotiations are private. It's too early to say whether the New York-based buyout firm would have board representation, the person said.
Wagoner, 55, is the longest-serving CEO at a U.S. automaker, after taking the top spot at Detroit-based GM in 2000. Alan Mulally joined Ford Motor Co. in 2006, and Robert Nardelli was hired at Chrysler last year. The person declined to comment on Nardelli's role, if any, in a GM-Chrysler merger.
``GM has good management,'' said Laurie Harbour-Felax, president of consulting firm Harbour-Felax Group in Berkley, Michigan. She questioned whether Cerberus ``could force a change.''
Cerberus has been in talks with GM and Nissan Motor Co. on a sale, merger or alliance involving Auburn Hills, Michigan- based Chrysler, whose 25 percent U.S. sales decline through September is the steepest among major automakers. GM's sales slide is 18 percent this year, and the biggest U.S. automaker has posted almost $70 billion in losses since 2004.
GM and Cerberus are targeting month's end to complete a deal, while Cerberus and Tokyo-based Nissan also have exchanged proposals, according to people familiar with the matter.
Spokesmen for GM, Chrysler and Cerberus haven't confirmed that the companies are in talks. Cerberus bought 80.1 percent of Chrysler from Daimler AG in 2007, and is negotiating to acquire the rest.
The shrinking U.S. auto market is ramping up pressure for Chrysler to find savings and stem losses that the company indicated had totaled more than $1.08 billion through the first half. The third-largest U.S. automaker has said it had $11.7 billion in cash at the end of June.
Chrysler said yesterday it would eliminate 25 percent of its salaried workforce, or about 4,300 jobs, by the end of the year, and trim capital spending on everything except its most- important products. That followed the Oct. 23 announcement of 1,825 job cuts at two sport-utility vehicle plants.
Further ``organizational and restructuring'' actions will be taken in the near future, Chrysler said yesterday, without elaborating.
Merger's Logic Questioned
Analysts including Citigroup Global Markets Inc.'s Itay Michaeli have questioned the logic of a GM-Chrysler merger, arguing that it could drag down both automakers before attaining long-term savings.
A combined company would need $10 billion to $12 billion in fresh liquidity, Michaeli wrote in a note to investors on Oct. 20. The New York-based analyst rates GM as ``sell.''
Cerberus may contribute some liquidity to a deal, people familiar with the negotiations have said.
GM also is working to return to profit. The automaker said yesterday that its planned reductions in the salaried workforce will go beyond the 5,000 jobs already targeted and that it will stop contributing to some retirement-savings plans.
GM fell 15 cents, or 2.5 percent, to $5.95 yesterday in New York Stock Exchange composite trading. Since the end of June 2000, the month Wagoner became CEO, the shares have dropped by 90 percent, the worst performance among the 30 companies in the Dow Jones Industrial Average.
Stupid Daily News---Political Roast----Lingerie Football Pics